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Equity Through Rent To Own

Wise Home Buying Builds Home Equity

This is the American dream—Owning a home.  It’s where you can live, sit on your nest egg, have stability and build wealth.

But for many, the first road block is coming up with the downpayment which is why many turn to rent-to-own properties with the hope of one day owning a home.

Now the question will arise.  “Do I build equity when I rent-to-own?”

And the answer is yes, depending on circumstances. 

In the good old days with rent-to-owns, a small portion of your rent goes towards purchasing the home. It is only a fraction but, it was still something.  But lawmakers in Washington D.C. have changed rent-to-own laws.  Property owners can no longer apply a portion of rent to the home and renters do not get the benefit of some of their rent going towards their dream.  So those changes are a game changer but, there is still hope.

So let’s take a look at a winning scenario. You decide to get a rent-to-own property through Clarksville Property Solutions. Find a great property and make a deal. When you make a rent-to-own purchase, you are agreeing on a set price with the seller. 

As the years pass, you treat your home with tender-loving-care because it’s your home, and one day the house you actually own.  Over time, if the house is in a good area, and the values of that area go up, your house will go up in value and it’s quite possible it will go up a lot.

Here’s where it gets really good. The sale price you agreed upon at the time of the contract is the price that the owner must sell it to you.  They cannot sell the house for a new or higher price.

So imagine, you find a house that you like and it’s worth $200,000 today.  Rent-to-own, and in 10 years you are ready to make an actual purchase, but the house is now worth $350,000.  The owner MUST sell it to you for $200,000 and you automatically will have $150,000 in equity. 

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